CINCH - Health Economics Research Center

Technocratic governments are often assumed to outperform partisan politicians because professionals can rely on expertise and independence. Technocracy however has a downside that is too frequently overlooked: Technocrats are aligned with professions, which heavily seek for rents. We assess the effects of professionals in government on economic outcomes. We exploit self-compiled biographical data of German state health ministers between 1955 and 2015 who enjoy great autonomy in designing hospital policy. Our results show that total factor productivity (TFP) growth in hospital care substantially slows down when medical doctors become health ministers. We can link this to in-group favoritism: Doctors serving as health ministers increase total hospital employment, and the number of doctors in particular, but hospital outputs and capital inputs do not change. We conclude that technocrats tend to gratify their profession, which hampers innovation, efficiency and growth.

We study the impact of school smoking bans on individual health behavior in Germany. Using a multiple difference-in-differences approach combined with randomization inference, we find that the propensity towards smoking reduces by 14-21 percent, while the number of smoked cigarettes per day decreases by 7-25 percent. After elaborating on treatment effect heterogeneity and intensity, we evaluate spillovers to other health behavior of the treated individual and to smoking behavior of non-treated persons living in the same household.

Several country-level studies, including a prominent one for the United States, have identified long-term effects of in-utero exposure to the 1918 influenza pandemic (also known as the Spanish Flu) on economic outcomes in adulthood. In-utero conditions are theoretically linked to adult health and socioeconomic status through the fetal origins or Barker hypothesis. Historical exposure to the Spanish Flu provides a natural experiment to test this hypothesis. Although the Spanish Flu was a global phenomenon, with around 500 million people infected worldwide, there exists no comprehensive global study on its long-term economic effects. We attempt to close this gap by systematically analyzing 117 Census data sets provided by IPUMS International. We do not find consistent global long-term effects of influenza exposure on education, employment and disability outcomes. A series of robustness checks does not alter this conclusion. Our findings indicate that the existing evidence on long-term economic effects of the Spanish Flu is likely a consequence of publication bias.